Monthly Archives: July 2015

Irish Water – How big a shambles? Gigashambles? Petashambles? ..

So this morning the news that Irish Water will, in all probability, not be allowed off the state balance sheet. It remains with us, unlike its instigator, Phil Hogan, now off the state accounts (except for his contingent liability of pension) Given that a main, and in principle laudable, aim of setting it up was to allow that, and in doing so allow it borrow away to invest without that borrowing being on the state headline debt burden, this is a major blow. But how big a shambles is it? Lets compare

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Hypothermia for God’s Sake

If I locked a three year old in a frigid damp room to the point of hypothermia, or took a 3m old baby into a blast freezer, most people would suggest that at least I needed counselling in parenting, if not active intervention by child services and police. Saying “its for the glory of god” would really not cut it. So why would we give a pass in another circumstance?

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Time to slow down finance?

A couple of weeks ago the NYSE, the largest and perhaps the most influential stock exchange in the world, was closed for a few hours. And nothing happened. The global economy went chugging along without a problem. Perhaps the time has come to consider whether we need to have trades taking place in time intervals measurable only by CERN and comprehendible only by Dr Who.

A further , related issue is that when we think of the stock exchange we are not thinking of the whole market by any means. Just as in other areas stock traders are increasingly resorting to trade in what are called ‘dark pools’, trading centers outside stock exchange rules and regulations. Some studies put the  volume of stock traded on these in excess of 40%. The ultra high frequency trading game, characterised by some as an arms race, may exceed 30% of all trades made on exchanges.

While the consensus of research is that there are undoubtedly private, individual gains to be made from shaving a nanosecond here and a millisecond there in executing share trading, the consensus is also that the social benefit is very hard to find if it exists at all.  To some extent high frequency trading does increase liquidity of stock transactions, and increases pricing efficiency measures. However, a question that can be legitimately asked is whether or not this matters. Economically, if we are spending hundreds of millions on something that doesn’t yield an overall economic or social benefit then it is wasted expenditure.


Some research suggests that this high speed game is exactly that- wasted. There is some evidence that high frequency trading is associated with increased quote stuffing (submission of lots of offsetting orders to increase congestion and thus advantage the first mover) and increased volatility. There are, in economic terms, externalities with respect to high frequency trading.

Given all this, it may be time to consider slowing down the pace of financial trading?  If there is little social benefit, and if the economic benefits are unclear, and I have we got ourselves into this “arms race”.  A number of proposals, and analysis, have emerged over the last couple of months which address the extent of which financial trading could be slowed down without any loss of liquidity, and a proposed new methodologies and approaches to ensure that financial training can continue.  In essence the proposals are that instead of trade is being processed as they arrive, but on the problems noted above, that they be processed perhaps once per second.  Trades would still be executed in the order in which they arrived, so there will still be a significant incentive for companies to invest in high speed trade positioning.  But the actual trades themselves would only be executed once per second.  That’s still nearly 25,000 opportunities to trade per day.

It is unclear as to whether or not this is possible; it would require coordinated regulatory change on a global basis.  Just as a financial transactions tax, a great idea in principle, founders on the rock that so long as one major player opts out then a world where there is a financial transactions tax will see trade is moving towards the area where there is no, so too in an environment where ultra high-speed trading is slow down it requires all major players to agree.  Now the Greeks are down a game theoretic finance Minister perhaps he might be available to design the regulatory coordination mechanism…

 This is an extended version of an Irish Examiner column

Where does the legal right to a 5y GREXIT exist?

The proposal by the German finance minister, and agreed to by others, that Greece take a five year break from the Eurozone is astounding. Its not so astounding that a man who has been musing on this for years has now tabled it. Schauble has as far back as 2012 been wanting this. What is astounding is that he had the gall to table it at the Eurogroup. Given that the Eurogroup is self admittedly a body with no legal basis or structures, I suppose they can do whatever they want. But when it’s a group of finance ministers musing on something ultra vires we should be concerned. And what they are doing, or proposing to do, is exactly that. Continue reading

Marie Curie Fellowships – Expressions of Interest sought

So, I am, along with some colleagues, interested in taking on some postdoc fellows under the Marie Curie programme.

One would be on a project on the the global determinants of metal and other critical mineral production. The main thrust is to examine the relationship between mineral production costs and mineral prices, investigating which leads which and in what regard.

The second is to address the matter of higher education institutions within the framework of local regional development objectives of maximizing employment, output and FDI investment potential as part of a suite of supply-side policies. The aim is for the candidate to work towards an analysis of the local Irish context and subsequently aim to make a series of comparisons with other similar regions of the European Union.

Candidates should have a phd in economics, with ag/resource economics a boon for the first and economic geography/regional studies for the second.

If you are possibly interested, let me know by email, with a compresensive CV, letter of interest, and a sample of recent research.